Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 Effect on Visual Merchandising in Fashion Store on Female Consumers’ Purchase Intention Astrid Nur Rahma1) and Ir.Mustika Sufiati Purwanegara2) Fashion retailers nowadays have been developed into higher existence. New players emerge in the market to satisfy customer demand by placing themselves in attractive shopping malls Fashion retailers could not depend on products, price, promotion, and place to win the competition among the fashion retailers. Visual merchandising becomes tools and opportunities to differentiate them with other competitors. Visual merchandising as the total store environment including window display, layout, coordination, signage, and lighting are managed by the retailers to attract customer to enter their store and expected to do a purchase in their store. The objective of this research is to examine the relationship of visual merchandising and female consumers’ purchase intentions. The second objective is to gain differences of customer perceptions in visual merchandising elements from the most two preferred fast fashion retailers: ZARA and TOPSHOP. The study was executed in Bandung, Indonesia. Questionnaire regarding visual merchandising is filled by 278 female respondents in age range 16 – 25 years. The results found that there are no significant differences between ZARA and TOPSHOP related to the visual merchandising perceptions. The hypotheses regarding Visual Merchandising were tested using Regression analysis employed SPSS program. Five of six hypotheses were accepted. The results indicated that Visual Merchandising – Window display give the highest effect related to Purchase Intention compare to another Visual Merchandising element. Keywords: Fast Fashion Retailer, Visual Merchandising, and Purchase Intention 1. Introduction Mall as a large retail contains of many stores, restaurants, and other business establishment placed in a series of connected and adjacent building or a single large building, has become an evidence of the fashion store growth, such as department store that provide fashion products from many brands and many merchandise variety, boutiques, and retail fashion store from local and foreign country. Especially mall in the big cities in Indonesia, the presence of foreign fashion retailer has increased. Each of the fashion stores competes to each store in order to make the customer enter the store and make a purchase. Talking about fashion retailers, nowadays it has been developed into higher existence. There are many competitions in the market. New players emerge in the market to satisfy customer demand by placing themselves in attractive shopping malls. The fashion retailers could not depend on products, price, promotion, and place to win the competition among the competitors. Visual merchandising as the total store environment including window and merchandise display, layout, coordination, merchandise assortment, signage, and lighting are managed by the retailers to attract consumer to enter their store and expected to create pleasure feeling for customer in order to make them do a purchase in their store. Visual merchandising also converges to create a distinctive image among the fashion retailers. _______________________________________________________________________ 1) Ms. Astrid Nur Rahma , School of Business and Management ITB, Jl.Ganesha 10, Bandung 40132, Indonesia, Phone: +62 22 2531923, Fax: +62 22 2504249 2) Dr. Ir. Mustika Sufiati Purwanegara , School of Business and Management ITB, Jl. Ganesha 10, Bandung 40132, Indonesia, Phone: +62 22 2531923, Fax: +62 22 2504249.e-mail: mustika@sbm-itb.ac.id 1 Proceedings of World Business and Social Science Research Conference 25-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 Fast fashion Retailers in Indonesia Fast moving fashion or fast fashion describe a scenario where fashion retailers implement a range of strategies in order to adequately meet market demand by ensuring that they have the right product, in the right place, in the right time (Hayes&Jones, 2006). Fast fashion brand as well as local retail fashion brands offer many kinds of fashion products such as clothes, bags, shoes, and accessorizes, drive to global fashion trends. Fast fashion clothing always follows up and creating season trend, new product to the store with amazing speed, and window display transformation is usually two times a week. Indonesia, with a human population more than 240 billion, continues to develop in a close record pace in recent years, with a consumption-based economy largely sheltering it from global downturn and increasingly growing middle class attracting global retailers. ZARA, Topshop, Mango, Forever 21, New Look, Bershka are some of fast fashion retailers that have already known in Indonesia. Their presence in the Indonesian‟s mall is usually taken to a higher podium where they appear more attractive and sparkling; it is also driven by the price factor that is quite expensive for most Indonesian people. Focused on ZARA and TOPSHOP, This two fashion store almost never quite of visitors in Indonesian Mall. It is also found that among another fast fashion retailers, ZARA and TOPSHOP are the most female consumers‟ fast fashion preferences, especially in teenage and young adult. Even they are grouped into fast fashion, what they are offering in the concept of visual such as window display, merchandise arrangement, and layout in the store might different. So even the concept of fast fashion is putting the right stock out at the right time in the right place and giving the right price, competition in the fast fashion sometimes happens in the means of design and good visual merchandising that could make the difference amongst another fashion store in order to attract their customer come to the store bring out the intentions of purchase. 2. Literature Background 2.1 Visual Merchandising Mills, Paul and Moorman (1995) defined visual merchandising as “the presentation of a store/brand and its merchandise to the customer through the teamwork of the store‟s advertising, display, special events, fashion coordination, and merchandising departments in order to sell the goods and services offered by the store/company”. Seock and Eun-lee (2013) construct the relationship of importance of visual merchandising and store image dimension and shopper behavior, such as store environment that related to layout and coordination, new style/trend information related to the window/merchandise display, merchandise assortment related to the layout and creative coordination and appealing exhibition of store image are related to layout and coordination. Creative coordination was found to be positively related to visit frequency. The variable chosen in this research related of visual merchandising element is window and merchandise display, layout and organization, creative coordination, signage, and lighting. 2.1.1 Window Display As retailing fashion industry, window display is important visually communication technique and marketing tool that has big impact to customers‟ first impression of store image and customer decision‟s to enter a store when they do not set out with specific purpose of 2 Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 purchasing a certain item in a store. The result from previous research indicated that the consumers looking for store image and product fit information from window displays were more likely to enter store than those looking for merchandise, promotion, and fashion information from window display (Ha, 2006). In terms of purchase intentions, the customers who see the product information and fit information from window display tended to purchase product in the store. 2.1.2 Layout and Organization Retail fashion store offers route in store to make the customer has no difficulties to find their way in store and finding the item they looked for. In-store traffic flow becomes the important role for the retail facility success (Hui et al. 2007). In fast fashion concept, layout and display features were determined as being a key communication due to flexibility for change offered by changeable and alteration display (Barnez, Lea-Greenwood, 2009). Clear route had potential make customer browse in a store. Not crowded aisle space will create enjoyable and pleasant feeling to customers while they are in store activity. It is important for a retail store to improve customer traffic flow and on-shelf availability. If the product that customers‟ looking for is not available on the store, the sale is potentially may be lost (Tlapana, 2009). 2.1.3 Coordination A recent study found significant effects for merchandise coordination on product evaluation and purchase intention in the apparel retail store setting (Lam & Mukherjee, 2005). Well coordination on apparel items induced higher aesthetic response toward two complementary products as a whole (Enjoyable, nice-looking, pleasing, attractive, good appearance, and beautiful) than poorly coordinated items. The previous study also revealed that the social impressions (Socially acceptable, fashionable, popular, high in status, desired impression, and approved by others) of apparel items were influenced by the coordination of apparel items (Ha, 2006). 2.1.4 Signage Lea- Greenwood (2009) describes signage as a crucial element of visual communication as it provides a “short-cut” to communicate relating to product in a store. Signage in the retail environment may fall into two categories, the first being institutional and directional, fixed signage includes more permanent signs indicating areas and facilities of the store for example, fitting rooms, exits, ladies wear, pay station, etc. The signage associated with alerting customers to fast fashion is representative of the second category that includes signage that is more flexible and has immediacy in providing information and promoting purchase. According to Colborne, 1982, effective signs identify departments, describe the merchandise and its price, inform customers of special sales event, alert customers to advertised merchandise, and determined the theme of special window and interior display. 2.1.5 Lighting Lighting is one of major contributing factors of visual merchandising in retail setting. It creates a distinctive effect on particular product displayed. The Park and Farr‟s research (2007) revealed that the color quality of lighting in a retail store environment such as color temperature and color appearance affects consumers‟ emotional states and the behavioral intention of approach-avoidance. Lighting contributes to the mood, arousal, and consumer 3 Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 behavior (Quartier et al. 2008). Light can draw attention to products, under bright lighting, products seems to more touched and examined that under „dim lighting‟ (Laguisa & Perney, 1974). Summers and Hebert (2001) conducted consumers‟ time spent in the store is longer with the presence of additional accent lighting in the display. Boyce et al. (2004) has measured the lighting aspect in the supermarket. The research based on customer opinions has found that lighting could make the store look brighter and live, more confortable, and more pleasing to the eye. 2.2 Purchase Intention In retail, intentions of purchase are usually determined by willingness to stay in the store, willingness to repurchase, willingness to purchase more in the future, and willingness to recommend the store to others (Macintosh and Lockshin 1997). Retailers need to understand the customers‟ patronage intention in order to the need to estimate customers‟ buying behavior of products or services offered, customers‟ willingness to come back to the store, and giving positive word-of-mouth to another customers (Donovan and Rossited 1982) Prior research suggests that store environment cues provide significant effect on customer purchase intention because the store environment influences the customers‟ potential benefits and overall perceived value (Liao et al.2012). If the consumers perceive the atmosphere of the store could change their mood and make them feel happy, the purchase intention will be promoted. The store design should arrange the store to give convenient feeling to its customer. The higher convenience that the store design present to its consumer, the better the customer‟s purchase intention could be promoted. From the previous literature on importance visual merchandising elements and purchase intention, the following research hypotheses were formulated for the study. H1: Visual Merchandising – Window Display is positively related to Purchase Intention H2: Visual Merchandising – Layout/Organization is positively related to Purchase Intention H3: Visual Merchandising – Coordination is positively related to Purchase Intention H4: Visual Merchandising – Signage is positively related to Purchase Intention H5: Visual Merchandising – Lighting is positively related to Purchase Intention H6: Visual Merchandising Window Display, Layout/Organization, Coordination, Signage, and Lighting are together positively related to Purchase Intention . 3. Research Method Methodologically, this research uses both quantitative and qualitative marketing research. Qualitative research is used to explore the most preferred fast fashion store. Quantitative research method is also conducted by using numerical and table figures to carry out the analysis process. 3.1 Sample and Data Collection Questionnaire was developed to collected data and distributed to judgmental sample of 400 females ranging age from 16 to 25 years old. In judgmental sampling, the criteria are mentioned: people who ever visited the ZARA and TOPSHOP store. Determination of the number of respondents is based on undefined population frame with 5% margin error, with a minimum 349 data must be collected. 4 Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 Questionnaires were distributed in Bahasa Indonesia and available in two formats, hard copy and soft copy. The hard copy questionnaires were spread in university in Bandung, and for the soft copy were spread in social Media such as Facebook and Twitter for the selected targets. Of the four hundreds of questionnaires, 359 questionnaire were returned. After gathered the returned questionnaires, 81 questionnaires were eliminated for some reasons: incompletely answered the questionnaire and giving the wrong answer in trick question as the concentration test for the respondents. As the result, only 278 questionnaires were usable to be used in the data analysis. The age group that has the largest proportion is occupied by the 21 and 20 years old (30% and 31%). Most of the respondents come from west Java (53%) as their city origin, followed by the respondents who come from Jakarta (53%) as their city origin. College students are the largest proportion of the respondents‟ occupation for 92 percent. The monthly expense revealed that 36 percent of the respondent stated the monthly expense is Rp1.500.001 – Rp2.500.000 followed by the respondents that have expense for Rp2.500.001 – Rp3.500.000 (34%) in a month. 3.2 Research Variables and Measurement The questionnaire consisted of three sections. The first section is about the respondents‟ data such as age, city origin, occupation, monthly expense and purchase behavior related to fashion product. The purchase behavior related to fashion product is divided into three parts, the first is to obtain information about the frequency of buying fashion product, the second is about fashion store preferences, and the third is asking about respondents‟ expense for a particular fashion products in last three months. The second part is designed to measure the importance of visual merchandising elements in the fashion store. The variable and the indicators of the four elements of Visual Merchandising: Window display, Layout and Organization, Creative Coordination, and Signage were taken and modified from Seock and Eun-Lee (2013), and the last variable of Visual Merchandising – Lighting was taken and modified from Singh (2006). The last part of questionnaire is concerned about the respondents‟ evaluation related to two fast fashion store: ZARA and TOPSHOP based on customer experiences. Both of the second and third of questionnaire section used a 10-point likert-type scale, with 1 (not important at all) to 10 (very important) to assess the importance of visual merchandising elements. 4. Analysis and Findings Data gathered from the survey was analyzed using Statistical Package for Social Science (SPSS) 20.0 program. 4.1 The Perception of Fast Fashion Store Related To Visual Merchandising: Analysis of Zara and Top shop Descriptive analysis is conducted related to the visual merchandising elements in two fast fashion: ZARA and TOPSHOP. All the indicators are measured in 10-point semantic scale, with 1 = not important at all to 10 (very important). 5 Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 Figure 2: Window Display Window Display New items are presented draw customers' attention Indicators Window displays' ornament attract customers' attention The store offers eye-catching window display ZARA The store offers seasonal window display TOPSHOP The store's window display offers variety of merchandise The use of mannquin stimulates to browse 7.2 7.4 7.6 7.8 8 8.2 8.4 8.6 Mean Score Six indicators measure window display perception. ZARA has the highest mean score in offering seasonal window display, while TOPSHOP has the highest score in offering eyecatching window display. As the fast fashion, it is important for both of them to juggle their window display appearance to attract customers‟ attention, putting something new will be impacted to the customer perception that the store always have something new to be explored. For both of fast fashion, the use of mannequin is failed stimulated customers‟ to enter their stores, it is demonstrated by the lowest mean score among another indicators. From the table above, there is no significant difference between ZARA and TOPSHOP in case of window display (Mean Square: 0.95, F: 0.00, Sig: 0.95) 6 Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 Figure 3: Layout Layout Merchandise display is not cramped or jumbled Indicators Aisles are uncrowded Shelf space is appropriately occupied (proportionately arranged) ZARA TOPSHOP The stores makes me active in browsing The store offers well structured route 7 7.5 8 8.5 Mean Score 9 Layout and organization in the fashion store purposed to make the customer feel comfortable to have browse the store and not difficult to find the products that they looking for. This variable is measured in five indicators: uncrowned aisles, merchandise display that not easy to cramped or jumbled, the store that has well structured route, the store that make active in browsing and the store that has shelf space occupied appropriately. ZARA has the highest mean score in providing the aisles that not crowded while TOPSHOP has the highest mean score in offering route that well structured. But overall there is no significant differences of layout from two fast fashion is (Mean square: 4.68, F: 2.60, Sig: 0.11) 7 Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 Figure 4: Coordination Coordination Indicators The presentation of merchandise is creative and unique The presentation of merchandise gives me inspiration on how to make my own style ZARA Color coordination creates an appealing store atmosphere. TOPSHOP The store offers attractive theme 7 7.2 7.4 7.6 7.8 8 8.2 8.4 Mean Score Coordination is measured by the four indicators, The highest mean score for both ZARA and TOPSHOP is in presenting the creative and unique merchandise, even ZARA has the higher mean score than TOPSHOP. The presentation of merchandise in this two fast fashion cannot inspire the customers‟ to make their own style. Color coordination in this two fast fashion assessed to be good even ZARA and TOPSHOP offer different store appearance. And still there is no significant differences among coordination between ZARA and TOPSHOP (Mean Square: 0.12, F:0.08, Sig: 0.77) 8 Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 Figure 5: Signage Indicators Signage Signs clearly identify items on sale. ZARA Discount or clearance items are displayed together in a specific area of the store. TOPSHOP 7.9 8 8.1 8.2 8.3 8.4 Mean Score Signage is the help tool in the fashion store to make customer know the information about the product and merchandise sold in the fashion store. In this variable is only measured by two indicators: discount or clearance that put in a specific area, and clear signs that identified items on sale. TOPSHOP has the highest mean score in displaying the discount and clearance items in the specific area and giving the clear sign related to the products that sold. Not differ from another visual merchandising element, signage also has no significant differences (Mean Square: 0.16, F: 0.09, Sig: 0.77) Figure 6: Lighting Indicators Lighting The lighting in the store accentuated the products that were displayed in the store ZARA TOPSHOP The lighting in the store was pleasing to me 7.9 8 8.1 8.2 8.3 8.4 Mean Score Contributing in visual merchandising element, lighting affects customer emotional states and behavioral intention of approach – avoidance. This variable is measured by two indicators; 9 Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 pleasing lighting and lighting that accentuate the product sold. From the two indicators that measured lighting perception from two fast fashions, TOPSHOP has the higher mean score than ZARA. The highest mean score comes from the pleasing lighting that TOPSHOP offered to its customers. From the two indicators measured the lighting perception, there is still no significant differences (Mean Square: 1.513, F: 1.064, Sig: 0.303) 4.2 Factor Analysis and Reliability of Visual Merchandising and Purchase Intention Exploratory Factor Analysis (EFA) has been conceived to endeavors to create inter correlated variables together under more general, actual variables. More specifically, the aim of factor analysis is to minimize the dimensionality from the initial space and to allow an interpretation towards new space, spanned by reduced quantity of new dimension that are purported to underlie the old ones (Rietveld & Van Hout 1993:254). Reliability used to test the stability and the consistency of the respondent in answering the questions, the results give the Cronbach alpha value that should be 0.6 or greater. Barlett‟s test of spericity and the Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy (MSA) was executed to identify whether the EFA was a suitable statistical technique for this study. For the rule of thumb based on Hair et al. (1998), factor loading should 0.5 or greater to be considered significant. So, items with rotated factor loading of 0.50 or greater were preserved. Moreover, any item loading on more than one factor should equal or greater than 0.6 (Liddle et al.,2010). Items with communalities less than 0.6 dropped for further analysis. Low communalities that less than 0.6 may inadequate contribution to the total variance of a certain variables. Corresponding to the aforesaid criteria of the factor analysis, 1 out of 6 indicators of Visual Merchandising – Window Display and 1 out of 5 indicators in visual merchandising – Layout/Organization is dropped for further analysis because of did not meet the criteria. Deleting of the total 2 items in Visual Merchandising affect on greater total variance of the variables and higher Cronbach alpha (See Table 1). 10 Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 Table 1: Factor Analysis Results: Visual Merchandising Created Total Factor Variable KMO Factor Variance Loading Visual Merchandising Window display 0.79 1 53.70 VWDEyeCatching 0.80 VWDOrnament 0.81 VWDCustAttention 0.65 VWDCustAttention VWDSeasonal 0.70 VWDUseMannequin 0.69 Visual Merchandising Layout/Organization 0.72 1 64.18 VLONotCramped 0.54 VLOShelfSpace 0.77 VLOActiveBrowse VLOWellRoute 0.80 VLOUncrowdedAisles 0.78 Visual Merchandising Coordination 0.71 1 49.27 VCRGiveInspiration 0.67 VCRCreativeUnique 0.74 VCRColorCoordination 0.68 VCRTheme 0.71 Visual Merchandising Signage 0.50 1 66.16 VSGClearSign 0.81 VSGDiscountProduct 0.81 Visual Merchanding Lighting 0.50 1 68.34 VLGPleasing 0.83 VLGAccentuated 0.83 Purchase Intention PIComeAgain 0.5 1 86.63 0.93 PIRegurlalyShop 0.93 Cronbach Alpha 0.70 0.66 0.66 0.49 0.54 0.84 4.3 Relationship Between Visual Merchandising elements and Purchase Intentions To assess the association relationship between two variables, a statistical technique used is a simple linear regression. This test also purposed to prove the hypotheses 1, 2, 3, 4, and 5 construct. Each of the elements of visual merchandising gives the significant value (0.00) to the relation of purchase Intentions (See Table 2). Visual Merchandising – Window Display is the element that presents the highest beta (0.36) of another Visual merchandising elements, indicating that it has the most influence to purchase Intention. 11 Proceedings of World Business and Social Science Research Conference 24-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7 Influencing Factor Dependent VM Window Display VM Layout VM Coordination VM Signage VM Lighting Table 2: Simple Linear Regression ANOVA Coef Independent F Sig Beta Purchase Intention 42.25 0.00 0.36 Purchase Intention 15.09 0.00 0.23 Purchase Intention 21.95 0.00 0.27 Purchase Intention 21.73 0.00 0.27 Purchase Intention 9.91 0.00 0.19 Sig 0.00 0.00 0.00 0.00 0.00 t 3.06 3.88 4.68 4.66 3.14 R2 0.13 0.02 0.07 0.07 0.04 To test the hypotheses 6, multilinear regression is conducted to find the effect from all elements of Visual Merchandising to Purchase Intention. (See Table 3.). From all the visual merchandising elements give the significant value (0.00) related to purchase intention. Only window display that significantly influenced the purchase intention with beta score 0.03. Table 3: Multiple Regression Influencing Factor ANOVA Coef Independent Dependent F Sig Beta Purchase VM Window 9.07 0.00 0.03 Intention Display VM Layout 0.05 VM Coordination 0.04 VM Signage 0.08 VM Lighting -0.03 Sig t 0.00 3.27 0.48 0.63 0.19 0.67 0.71 0.47 1.30 -0.42 R2 0.14 5. Conclusion The aim of this research was to investigate the relationship of the importance visual merchandising elements on female customers‟ purchase intention especially in fashion store. An important finding of this study was the visual merchandising elements certainly influence female customers‟ purchase intentions. The result demonstrated that there was significant relationship between purchase intention to visual merchandising elements: window display, layout, coordination, signage, and lighting in the store when it is linked partially. When the entire visual merchandising element is linked together to purchase intention, only window display that give significant value related to purchase intention. This research also provides the descriptive analysis from two fast fashion stores, which are ZARA and TOPSHOP related to its visual merchandising element. The results divulge that there is no significant differences between this two fast fashion, the mean score obtained from descriptive analysis indicated that visual merchandising element in window display, layout, coordination, signage, and lighting from this two fast fashion has already proficient. In summary, the current study has both managerial and research implication. Confronting the present ever dynamic in fashion store atmosphere, it gives the managers in fashion store for a better understanding of the visual merchandising element affects the females‟ customer purchase intentions. Management of the fashion store also could use the visual merchandising elements to underlined in substantiate a retail strategies. In example, fashion retailers could use window display element to attract customers to enter the store and utilizing the visual merchandising as the strategies could create favorable attitudes of the customers, such as customers‟ would aware about the products offered in the store, want to browse in the store, and do a purchase. This research has limitation in sample data that was collected from Bandung only. 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